Meralco seeking ERC okay for P21.46-B capex in 2019

By Lenie Lectura – May 6, 2018
from Business Mirror

THE Manila Electric Co. (Meralco) is seeking regulatory approval for its 2019 capital expenditures (capex) in the amount of P21.46 billion.

In its eight-page application filed before the Energy Regulatory Commission (ERC), the utility firm proposed a capex of P8.7 billion for 27 major projects and P12.72 billion for 36 residual projects.

Bulk of the proposed capex is programmed for the expansion of the advanced metering infrastructure (AMI) which costs P2.37 billion, followed by distribution transformers worth P1.78 billion listed under the residual projects.

“Meralco’s regulatory year 2019 capex program is geared toward providing reliable service to its customers by creating an adequate, safe, efficient and viable distribution network, while providing the needed capacity to address the forecasted load growth within its franchise area,” it said in its application.

The proposed capex program, it added, is necessary to meet growth in peak demand and customer connections, to ensure sustained network efficiency, to enhance its distribution network, to comply with regulatory requirements, and support government’s public-private partnership programs.

Meralco forecasts a 4.5-percent growth in peak demand and a 3.6-percent growth in customer base.

“The increase…will require Meralco to increase the capacity of its electric distribution system in order to accommodate customer connections, while maintaining the reliability and power quality of the distribution system,” it said.

It also said the capex is required to maintain existing assets, improve network performance and enhance customer-service performance. Moreover, technology projects will allow it to enhance its distribution network, enabling it to respond effectively to line and network outages, which will reduce service interruptions of customers.

It said some of the capex projects are intended to comply with the requirements of the rules to govern the implementation of an AMI system. Also, some of the projects are meant to comply with government prescriptions, such as distribution services, open access rules, wholesale electricity spot market, metering requirements, and retail competition and open access rules.

“In light of the resulting benefits of Meralco’s regulatory year [RY] 2019 capex program in the overall service to the electricity consumers, Meralco respectfully submits the building-block components, particularly the return of capex and return on capital associated therewith from the time the capex is put in service and considered used and useful, should be considered as a deferred amount to be included in the calculation of Meralco’s next reset rates,” Meralco said.

It said non-approval of its capex projects will severely hamper its operations and affect its ability to deliver electric service to its customers.

“It is imperative for Meralco to undertake in a timely manner the expansion and rehabilitation of its network facilities through acquisition of new assets in order to ensure continuous delivery of reliable service, and comply with safety, performance and other regulatory requirements, while addressing the growing needs of its more than six million customers,” it said.

Pending approval of its application, Meralco seeks a provisional authority to immediately implement its RY 2019 capex program.

Meralco’s capex for the third RY of its fourth regulatory period  amounting to P18.8 billion still awaits approval of the ERC. The amount covers the period July 2017 to June 2018.